Efta Indonesia Free Trade Agreement

The Federal Council considers that the total imports of palm oil into Switzerland by the EPA will not increase. Swiss imports of palm oil from Indonesia are currently very low. In 2016-18, they averaged 584 tonnes per year, or about 2% of total imports of 30,400 tonnes. Indonesia may gain long-term market share as a result of the agreement. But this will only be the case if Indonesian palm oil producers are able to meet the conditions of the Swiss market. To do this, it is essential to meet the sustainability requirements of palm oil in the local market, which are high internationally. Almost all palm oil destined for the Swiss food industry is already certified to sustainability standards. To ensure that sustainability requirements are met, palm oil, preferably imported from Indonesia, must have been produced sustainably. The details are governed by a regulation. The global network of preferential trade agreements outside the EU consists of 29 agreements with 40 partners.

Seven joint declarations of cooperation complete this network. More than 12% of EFTA`s total exports go to these trading partners and are the source of 7.5% of EFTA imports. In the absence of trade with the EU, the EFTA Free Trade Agreement now covers 24% of EFTA exports and 21% of EFTA imports. In 2017, EFTA`s world trade amounted to $766 billion, of which 43.5% was with countries outside the EU. It was not possible to reach an agreement on tariff reductions for all textile products, a sector particularly sensitive for Indonesia. However, it was agreed to eliminate tariffs on major Swiss exports in this sector over a period of five to twelve years. Palm oil is one of Indonesia`s main exports. Although very little palm oil is imported from Indonesia to Switzerland (only 34 tonnes in 2019, or only 0.1% of total palm oil imports), an agreement must be balanced and reflect the interests of both parties. An uncompromising agreement in the palm oil sector would not have taken Into account Indonesia`s interests and would therefore have been doomed to failure. A section on sustainable development is included in the agreement. The two sides had already signed a joint declaration on 23 November 2018 in Geneva, Switzerland, concluding the EPA negotiations.

The EPA covers all areas normally covered by EFTA free trade agreements, such as trade in goods and services, investment, intellectual property rights, competition, public procurement, trade and sustainable development, cooperation and capacity building, and legal and horizontal provisions. The agreement improves legal and planning security in economic relations with Indonesia, an emerging economy, and creates new opportunities for Swiss companies. In the area of merchandise trade, Switzerland will be able to eliminate the current discrimination in favour of countries that have already concluded trade agreements with Indonesia, such as Japan and Australia. Swiss companies will have a competitive advantage over competitors from countries that have not signed a free trade agreement with Indonesia, with relatively high tariffs. The European Union is currently negotiating an agreement with Indonesia. Swiss exporters could therefore face discrimination against their main competitors in the EU.